Sept. 18 (Bloomberg) -- Nigerian-owned oil companies are
boosting their share of the country’s output by taking up fields
in restive areas as international energy companies retreat,
Ecobank Research said.

For more than five decades, Royal Dutch Shell Plc, Exxon
Mobil Corp., Chevron Corp., Total SA and Eni SpA pumped about 97
percent of Nigeria’s output, according to figures provided by
state-owned Nigerian National Petroleum Corp. That fell to 90
percent in 2006 and is set to shrink further to about 60 percent
in five years “if the current divestment trend continues,”
Rolake Akinkugbe, a London-based energy analyst for Ecobank
Research, said in an e-mailed response to questions.

Shell and Chevron are selling assets that can produce
300,000 barrels a day from nine onshore and shallow-water oil
leases. Stakes in 13 other fields were sold jointly by Shell,
Total and Eni since 2010, with most of them bought by smaller
Nigerian companies including Seplat Petroleum Development Co.,
First Hydrocarbon Ltd. and Neconde Energy Ltd.

As international energy companies led by Shell and Chevron
give up onshore and shallow water fields plagued by persistent
unrest, violence and crude theft in the oil-rich Niger River
delta, smaller Nigerian companies are taking over, expanding
their output capacity.

Operational Difficulties

“These divestments represent the single largest
opportunity for indigenous Nigerian firms with the requisite
expertise, partnerships and capital to ascend into the league of
major upstream players,” Akinkugbe said. If they overcome the
operational difficulties they “will become increasingly
instrumental” to Nigeria meeting its output target of 3 million
barrels a day by 2020, she said.

Local companies are probably “better off dealing with some
of the security challenges in the Niger delta than the foreign
companies,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co., a business advisory group, said
in a phone interview. It’s easier for them to communicate with
the communities and win their sympathy , he said.

Nigeria, OPEC’s seventh-largest producer, pumped more than
2 million barrels of crude a day last month, according to data
compiled by Bloomberg. The West African nation has Africa’s
biggest crude reserves after Libya, more than 36 billion
barrels. Crude prices rose 0.8 percent to $106.24 a barrel as of
3:46 p.m. in London.

Shallow Waters

Armed attacks led by the Movement for the Emancipation of
the Niger Delta, fighting for the region’s control of oil
resources, cut Nigeria’s oil output by 28 percent, mainly from
the delta’s swamps and shallow waters, from 2006 to 2009,
according to figures complied by Bloomberg. Though the violence
subsided after thousands of fighters accepted a government
amnesty offer in 2009 and disarmed, a surge in oil theft in
recent years by gangs tapping crude from pipelines pushed output
down to four-year lows earlier this year.

A proposed law to reform the way the oil and gas industry
is regulated and funded has been delayed in parliament for five
years, with international energy companies saying its fiscal
terms, including taxes and royalties, would make offshore
exploration unprofitable. The bill also proposes terms to boost
the participation of Nigerian companies in the industry.

If passed, the law could be a “real catalyst for boosting
local production, with attractive economics for small and
marginal fields which many local companies operate,” Akinkugbe
said.

Capital Efficiency

Eleven local companies including Seplat, South Atlantic
Petroleum Ltd., Seven Energy Ltd., First Hydrocarbon and Sahara
Energy Field Ltd. have been short-listed to buy the Chevron
fields on sale, Lagos-based Africa Oil+Gas Report reported on
Aug. 29. Nigerian energy company Oando Plc, which signed a deal
last year to acquire the oil assets of ConocoPhillips in the
country, said on Sept. 16 it will also take up the Houston-based
company’s stake in the proposed Brass LNG plant in the Niger
delta for $105 million.

Chevron is offering all of its 40 percent stake in each
field and aims to complete the transactions before the end of
this year, Jim Craig, a Houston-based spokesman, said in an e-mail, without giving details. For Chevron it’s a chance to
“enhance capital efficiency” and for the prospective buyers an
“opportunity to grow their own assets,” he said.